CF Walker Crips Select Income Trust Annual Report and Financial Statements 31 January 2012

Transcription

1 CF Walker Crips Select Income Trust Annual Report and Financial Statements 31 January 2012

2 MANAGER Capita Financial Managers Limited Head Office: Ibex House Minories London EC3N 1DX Telephone: Fax: (Authorised and regulated by the Financial Services Authority) DIRECTORS OF THE MANAGER C. Addenbrooke N. Boyling C. Hayes K.J. Midl J.E. Millan R.M. Short INVESTMENT MANAGER Walker Crips Asset Managers Ltd Finsbury Tower Bunhill Row London EC1Y 8LZ (Authorised and regulated by the Financial Services Authority) TRUSTEE BNY Mellon Trust & Depositary (UK) Limited The Bank of New York Mellon Centre 160 Queen Victoria Street London EC4V 4LA (Authorised and regulated by the Financial Services Authority) REGISTRARS Capita Financial Administrators Limited Customer Service Centre: 2 The Boulevard City West One Office Park Gelderd Road Leeds LS12 6NT Telephone: Fax: (Authorised and regulated by the Financial Services Authority) CONTENTS Manager s Report... 2 Investment Manager s Report... 3 Trust Information... 4 Portfolio Statement... 6 Summary of Material Portfolio Changes... 8 Authorised Status Manager s Statement Statement of Manager s Responsibilities Statement of Trustee s Responsibilities Report of the Trustee Independent Auditor s Report to the Unitholders of CF Walker Crips Select Income Trust FINANCIAL STATEMENTS Statement of Total Return Statement of Change in Net Assets Attributable to Unitholders Balance Sheet Notes to the Financial Statements Distribution Table General Information INDEPENDENT AUDITOR KPMG Audit Plc 1 The Embankment Neville Street Leeds LS1 4DW (Chartered Accountants) CF Walker Crips Select Income Trust 1

3 MANAGER S REPORT FOR THE YEAR ENDED 31 JANUARY 2012 INVESTMENT MANAGER S REPORT FOR THE YEAR ENDED 31 JANUARY 2012 The following policies have been changed effective from 1 April 2011: Increase of registration fees; and Change of investment policy; and Change in investment and borrowing powers; and Change in-specie redemptions. Full details of the changes can be found in the revised Prospectus dated 13 January CAPITA FINANCIAL MANAGERS LIMITED Manager of CF Walker Crips Select Income Trust 28 May 2012 INVESTMENT OBJECTIVE AND POLICY The investment objective of the CF Walker Crips Select Income Trust ( the Trust ) is to provide holders with a combination of high income and the prospect for modest capital growth by investing predominantly in FSA regulated collective investment schemes from a selection of fund management groups. The APCIMS Income Index is the benchmark comparison against which the performance of the Trust is measured. INVESTMENT REVIEW Following impressive investment returns from most asset classes in the first half of the year, the summer period of 2011 proved particularly turbulent for investors with world stockmarkets falling sharply as concern grew over the fragility of European sovereign debt levels and the strength of the European banking system. This resulted in a retreat to perceived safe haven assets by investors in the third and forth quarters of 2011, American Treasury Bills and UK Gilts being well supported by investors the latter returning over 17% during the year. Gilt yields have now fallen to historically low levels and some commentators suggest these have now reached bubble like conditions. In November the European Central Bank took the decision to provide the European banking system with unlimited liquidity, which previously had almost dried up and this coupled with agreement with Greece over bailout conditions proved the catalyst in December and January for the return of investor risk appetite and resultant sharp rally in risk assets to the end of this reporting period. Whilst many have likened the Greek bailout to a sticking plaster, ample liquidity in the wholesale money markets should continue to prove supportive for risk assets in the near term. Against this background there has been one major sale, encashing shares in the Sarasin AgriSar fund to maintain liquidity within the Trust. WALKER CRIPS ASSET MANAGERS LTD Investment Manager 28 February CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 3

4 TRUST INFORMATION PERFORMANCE RECORD Income units Calendar Year Highest Buying Price P Lowest Selling Price P Distribution per unit P RISK WARNING An investment in a unit trust should be regarded as a medium to long term investment. Investors should be aware that the price of units and the income from them can fall as well as rise and investors may not receive back the full amount invested. Past performance is not necessarily a guide to future performance. Investments denominated in currencies other than the base currency are subject to fluctuation in exchange rates, which can be favourable or unfavourable * Accumulation units Calendar Year * * To 31 January Highest Buying Price P Lowest Selling Price P Distribution per unit P TOTAL EXPENSE RATIO Expense Type % Manager s periodic charge Other expenses Collective investment scheme costs Total expense ratio % The Total Expense Ratio (TER) represents the total expenses of the Trust, excluding transaction costs, interest payable and expenses of a capital nature, expressed as a percentage of the average net assets during the accounting period. Other expenses include fees payable to the trustee and auditor, publication costs, registration fees and safe custody and other related bank charges. The collective investment scheme costs represent the TERs of the underlying funds which are held as portfolio investments. Their inclusion has been calculated on a weighted basis against the Trust s net assets at the balance sheet date NET ASSET VALUE Date Unit Class Net Asset Value Income Accumulation Income Accumulation Income Accumulation 1,897,437 5,731,771 2,093,190 5,497,841 1,772,126 4,824,480 Units in Issue 1,859,623 4,033,572 1,931,774 3,531,177 1,707,946 3,127,004 Net Asset Value pence per unit TRUST PERFORMANCE TO 31 JANUARY 2012 (%) CF Walker Crips Select Income Trust APCIMS Income Index* Underperformance * Source: Bloomberg. 1 year 3 years 5 years The performance of the Trust is based on the published price per Accumulation unit which includes reinvested income Details of the distributions per unit for the year are shown in the Distribution Table on page CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 5

5 PORTFOLIO STATEMENT AS AT 31 JANUARY 2012 Total Net Assets Holding Portfolio of Investments Value % % CORPORATE BONDS 422,595 Baille Gifford Corporate Bond 301, UK OTHER BONDS 300,000 Artemis Strategic Bond 145, ,735 Henderson Strategic Bond 245, ,707 Invesco Perpetual Tactical Bond 267, ,504 Kames Strategic Bond 157, ,365 Legal & General High Income 219, ,496 Royal London Sterling Extra Yield Bond 258, ,223 Standard Life Global Index-Linked Bond 270, TOTAL UK OTHER BONDS 1,564, UK EQUITY INCOME 196,665 Artemis Income 312, ,565 AXA Framlington Equity Income 232, ,978 CF Walker Crips Equity Income* 350, ,667 Invesco Perpetual High Income 342, ,308 Neptune Income 316, ,052 Somerset Emerging Markets Dividend Growth 216, ,061 Standard Life UK Equity High Income 246, TOTAL UK EQUITY INCOME 2,018, UK ALL COMPANIES 250,000 SVM UK Absolute Alpha 209, SPECIALIST 139,289 CF Macquarie Global Infrastructure Securities* 138, ,911 Threadneedle Credit Opportunities 326, Total Net Assets Holding Portfolio of Investments Value % % EUROPE 250,300 Henderson European Absolute Return 275, ,717 Ignis Argonaut European Income 103, ,998 Neptune European Opportunities 137, TOTAL EUROPE 516, NORTH AMERICA 251,004 AXA US Short Duration High Yield 254, ,501 JPMorgan US Equity Income 343, TOTAL NORTH AMERICA 598, ASIA 192,480 Newton Asian Income 325, JAPAN 413,544 Jupiter Japan Income 205, Portfolio of investments 6,603, Net other (liabilities)/assets (6,953) (0.11) 0.41 Net assets 6,596, The investments have been valued in accordance with note 1(g) and are collective investment schemes. * Related party holdings. TOTAL SPECIALIST 465, GLOBAL BONDS 14,390 Kames High Yield Global Bond 147, ,877 Legal & General Dynamic Bond 250, TOTAL GLOBAL BONDS 397, CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 7

6 SUMMARY OF MATERIAL PORTFOLIO CHANGES FOR THE YEAR ENDED 31 JANUARY 2012 Total purchases for the year (note 12) 450,000 Total sales for the year (note 12) 1,184,505 Purchases Cost Sales Proceeds Baille Gifford Corporate Bond 300,000 Kames High Yield Global Bond 150,000 SWIP Absolute Return Bond 308,504 Thames River High Income 232,412 Sarasin AgriSar 221,044 Kames Sterling Corporate Bond 182,817 Old Mutual Corporate Bond 169,728 CF Macquarie Global Infrastructure Securities 70,000 The summary of material portfolio changes represent all of the purchases and sales during the year. 8 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 9

7 AUTHORISED STATUS MANAGER S STATEMENT CF Walker Crips Select Income Trust ( the Trust ) is a unit trust authorised by the Financial Services Authority with effect from 4 January It is a Non-UCITS Retail Scheme and the currency of the Trust is pounds sterling. Unitholders are not liable for the debts of the Trust. A unitholder is not liable to make further payment to the Trust after he has paid the price on purchase of the units. This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook as issued and amended by the Financial Services Authority. C. ADDENBROOKE C. HAYES CAPITA FINANCIAL MANAGERS LIMITED Manager of CF Walker Crips Select Income Trust 28 May 2012 STATEMENT OF MANAGER S RESPONSIBILITIES The Manager is responsible for preparing the financial statements in accordance with applicable law and United Kingdom Generally Accepted Accounting Practice. The Financial Services Authority s Collective Investment Schemes Sourcebook (the COLL Sourcebook ) requires the Manager to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the Trust and of the net revenue/expense and of the net capital gains/losses on the scheme property of the Trust for that year. In preparing those financial statements, the Manager is required to: select suitable accounting policies, as described in the attached financial statements, and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable United Kingdom accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements; prepare the financial statements in accordance with the requirements of the IMA SORP; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in business. The Manager is responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Trust and to enable it to ensure that the financial statements comply with the COLL Sourcebook. The Manager is also responsible for safeguarding the assets of the Trust and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the Manager is aware: there is no relevant audit information of which the Trust s Auditor is unaware; and the Manager has taken all steps that it ought to have taken to make itself aware of any relevant audit information and to establish that the Auditor is aware of that information. 10 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 11

8 STATEMENT OF TRUSTEE S RESPONSIBILITIES INDEPENDENT AUDITOR S REPORT TO THE UNITHOLDERS OF CF WALKER CRIPS SELECT INCOME TRUST The Trustee is under a duty to take into its custody and to hold the property of the Trust in trust for the holders of units. It is also the duty of the Trustee to enquire into the conduct of the Manager in the management of the Trust and to ensure that the Trust is managed in accordance with all applicable rules and restrictions in each annual accounting period, and to report thereon to unitholders. A copy of the Trustee s report is set out below. REPORT OF THE TRUSTEE FOR THE YEAR ENDED 31 JANUARY 2012 In our opinion, the Manager has managed the Trust, in all material respects, during the period covered by this Report in accordance with the investment and borrowing powers and the restrictions applicable to the Trust and otherwise in accordance with the provisions of the Trust Deed and the rules in the COLL Sourcebook. BNY MELLON TRUST & DEPOSITARY (UK) LIMITED Trustee of CF Walker Crips Select Income Trust 28 May 2012 We have audited the financial statements of the CF Walker Crips Select Income Trust ( the Trust ) for the year ended 31 January 2012 set out on pages 15 to 26. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). This report is made solely to the Trust s unitholders, as a body, in accordance with Rule of the Collective Investment Schemes sourcebook ( the COLL Rules ) issued by the Financial Services Authority under section 247 of the Financial Services and Markets Act Our audit work has been undertaken so that we might state to the Trust s unitholders those matters we are required to state to them in an auditor s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trust and the Trust s unitholders as a body, for our audit work, for this report, or for the opinions we have formed. RESPECTIVE RESPONSIBILITIES OF THE MANAGER AND AUDITOR As explained more fully in the Statement of Manager s Responsibilities set out on page 11 the Manager is responsible for the preparation of financial statements which give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s (APB s) Ethical Standards for Auditors. SCOPE OF THE AUDIT OF THE FINANCIAL STATEMENTS A description of the scope of an audit of financial statements is provided on the APB s website at OPINION ON FINANCIAL STATEMENTS In our opinion the financial statements: give a true and fair view, in accordance with UK Generally Accepted Accounting Practice, of the financial position of the Trust as at 31 January 2012 and of the net revenue and the net capital losses on the property of the Trust for the year then ended; have been properly prepared in accordance with the Trust Deed, the Statement of Recommended Practice relating to Authorised Funds and the COLL Rules. OPINION ON OTHER MATTERS PRESCRIBED BY THE COLL RULES In our opinion the information given in the Manager s Report is consistent with the financial statements. We have received all the information and explanations which we consider necessary for the purposes of our audit. 12 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 13

9 Independent Auditor s Report to the Unitholders (continued) MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION We have nothing to report in respect of the following matters where under the COLL Rules we are required to report to you if, in our opinion: proper accounting records for the Trust have not been kept; or the financial statements are not in agreement with the accounting records. Gareth Horner for and on behalf of KPMG Audit Plc, Statutory Auditor Chartered Accountants Leeds 28 May 2012 FINANCIAL STATEMENTS STATEMENT OF TOTAL RETURN FOR THE YEAR ENDED 31 JANUARY 2012 Notes Income: Net capital (losses)/gains 2 (222,608) 565,321 Revenue 3 284, ,840 Expenses 4 (127,786) (137,672) Finance costs: Interest 6 (186) (323) Net revenue before taxation 156, ,845 Taxation 5 (2,969) (5,739) Net revenue after taxation 153, ,106 Total return before distributions (69,392) 713,427 Finance costs: Distributions 6 (238,973) (242,998) Change in net assets attributable to unitholders from investment activities (308,365) 470,429 STATEMENT OF CHANGE IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS FOR THE YEAR ENDED 31 JANUARY 2012 Note Opening net assets attributable to unitholders 7,591,031 7,629,208 Amounts receivable on issue of units 39, ,843 Amounts payable on cancellation of units (894,297) (823,823) (854,335) (681,980) Stamp duty reserve tax 1(e) (906) (724) Change in net assets attributable to unitholders from investment activities (308,365) 470,429 Retained distribution on Accumulation units 169, ,098 Closing net assets attributable to unitholders 6,596,606 7,591, CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 15

10 Financial Statements (continued) BALANCE SHEET AS AT 31 JANUARY 2012 ASSETS Notes Investment assets 6,603,559 7,560,151 Other assets Debtors 7 64, ,115 Cash and bank balances 88,750 88,971 Total other assets 152, ,086 Total assets 6,756,494 8,044,237 LIABILITIES Other liabilities Creditors 8 (27,951) (356,304) Bank overdrafts (97,998) (63,531) Distribution payable on Income units (33,939) (33,371) Total other liabilities (159,888) (453,206) Total liabilities (159,888) (453,206) Net assets attributable to unitholders 6,596,606 7,591,031 NOTES TO THE FINANCIAL STATEMENTS AS AT 31 JANUARY ACCOUNTING POLICIES The principal accounting policies, which have been applied in both the current and prior year, are set out below: (a) Basis of preparation The financial statements have been prepared under the historical cost basis, as modified by the revaluation of investments and in accordance with the Statement of Recommended Practice ( SORP ) issued by the Investment Management Association in October (b) Recognition of revenue Distributions from collective investment schemes are recognised when the schemes are quoted ex-distribution. Equalisation returned with the distribution is deducted from the cost of the scheme and does not form part of the distributable revenue. Rebates of annual management charges (AMC rebates) from underlying investments are accounted for on an accruals basis and are recognised as revenue or capital in line with the distribution policies of the underlying investments. Interest on bank and other cash deposits is recognised on an accruals basis. All revenue is recognised as a gross amount that includes any withholding taxes but excludes any other taxes such as attributable tax credits. (c) Treatment of stock and special dividends The ordinary element of stock received in lieu of cash dividends is credited to capital in the first instance followed by a transfer to revenue of the cash equivalent being offered and this forms part of the distributable revenue. Special dividends are reviewed on a case by case basis in determining whether the dividend is to be treated as revenue or capital. Amounts recognised as revenue will form part of the distributable revenue. The tax accounting treatment follows the treatment of the principal amount. (d) Treatment of expenses All expenses, except for those relating to the purchase and sale of investments, and stamp duty reserve tax, are charged initially against revenue. (e) Taxation Corporation tax is provided at 20% on taxable revenue, after deduction of allowable expenses. Where overseas tax has been deducted from overseas revenue that tax can, in some instances, be set off against the corporation tax payable, by way of double tax relief. Deferred tax is provided using the liability method on all timing differences arising on the treatment of certain items for taxation and accounting purposes, calculated at the rate at which it is anticipated the timing differences will reverse. Deferred tax assets are recognised only when, on the basis of available evidence, it is more likely than not that there will be taxable profits in the future against which the deferred tax asset can be offset. Stamp duty reserve tax suffered on surrender of units is deducted from capital. 16 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 17

11 Financial Statements (continued) Notes to the Financial Statements (continued) 1. ACCOUNTING POLICIES (continued) (f) Distribution policy Surplus revenue, as disclosed in the financial statements, after adjustment for items of a capital nature, is distributable to unitholders. Any deficit of revenue is deducted from capital. The annual management charge is transferred to capital for distribution purposes in line with the Trust s investment objective. Interim distributions may be made at the Manager s discretion. Final distributions are made in accordance with the Regulations. Distributions which have remained unclaimed by unitholders for more than six years are credited to the capital property of the Trust. (g) Basis of valuation of investments Listed investments are valued at closing bid prices excluding any accrued interest in the case of fixed interest securities, on the last business day of the accounting period. Collective investment schemes are valued at quoted bid prices for dual priced funds and at quoted prices for single priced funds, on the last business day of the accounting period. Unlisted or suspended investments are valued by the Investment Manager taking into account, where appropriate, latest dealing prices, valuations from reliable sources, financial performance and other relevant factors. (h) Exchange rates Transactions in foreign currencies are recorded in sterling at the rate ruling at the date of the transactions. Assets and liabilities expressed in foreign currencies at the end of the accounting period are translated into sterling at the closing exchange rates ruling on that date. 2. NET CAPITAL (LOSSES)/GAINS The net capital (losses)/gains during the year comprise: Non-derivative securities (231,919) 555,846 Transaction charges (470) (415) AMC rebates from underlying investments 9,781 9,890 Net capital (losses)/gains (222,608) 565, REVENUE Non-taxable dividends 138, ,864 Taxable dividends 3,695 7,656 Unfranked interest 140, ,988 AMC rebates from underlying investments 1, Other income 54 Total revenue 284, , EXPENSES Payable to the Manager, associates of the Manager and agents of either of them: Manager s periodic charge 104, ,139 Registration fees 5,780 4,618 Payable to the Trustee, associates of the Trustee and agents of either of them: 110, ,757 Trustee s fees 6,001 5,884 Safe custody and other bank charges 2,318 2,700 8,319 8,584 Other expenses: FSA fee Fees paid to auditor audit 6,480 6,480 tax services 2,400 1,800 8,936 8,331 Total expenses 127, , TAXATION a) Analysis of charge for the year Corporation tax at 20% 5,461 7,974 Adjustments in respect of prior periods (2,492) Current tax charge (note 5b) 2,969 7,974 Deferred tax origination and reversal of timing differences (note 5c) (2,235) Total taxation 2,969 5, CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 19

12 Financial Statements (continued) Notes to the Financial Statements (continued) 5. TAXATION (continued) b) Factors affecting current tax charge for the year The tax assessed for the year differs from the standard rate of corporation tax in the UK for an authorised fund (20%) ( : 20%) for the reasons explained below. Net revenue before taxation 156, ,845 Corporation tax at 20% 31,237 30,769 Effects of: Non-taxable dividends (27,732) (24,773) AMC rebates taken to capital 1,956 1,978 Corporation tax charge 5,461 7,974 Adjustments in respect of prior periods (2,492) Current tax charge (note 5a) 2,969 7,974 c) Deferred tax Provision at the start of the year 2,235 Deferred tax charge in the year (note 5a) (2,235) Provision at the end of the year 6. FINANCE COSTS Distributions The distributions take account of revenue received on the issue of units and revenue deducted on cancellations of units, and comprise: Interim 108, ,401 Final 124, , , ,053 Add: Revenue deducted on cancellation of units 5,960 6,272 Deduct: Revenue received on issue of units (216) (1,327) Net distributions for the year 238, ,998 Interest Total finance costs 239, ,321 Details of the distributions per unit are set out in the table on page FINANCE COSTS (continued) Distributions represented by: Net revenue after taxation 153, ,106 Allocations to Capital: Manager s periodic charge, net of tax relief 83,801 92,911 AMC rebates from underlying investments 1,956 1,978 85,757 94,889 Balance brought forward 1 4 Balance carried forward (1) (1) Net distributions for the year 238, , DEBTORS Amounts receivable for issue of units 44 Sales awaiting settlement 322,359 Accrued revenue: Non-taxable dividends 17,828 18,367 Unfranked interest 21,665 24,489 AMC rebates from underlying investments 3,356 3,010 42,849 45,866 Prepaid expenses 9 8 Taxation recoverable: Income tax 21,283 26,553 Corporation tax ,283 26,882 Total debtors 64, , CREDITORS Amounts payable for cancellation of units 2,719 3,920 Purchases awaiting settlement 324,865 Accrued expenses: Amounts payable to the Manager, associates of the Manager and agents of either of them: Manager s periodic charge 8,396 9,835 Registration fees ,895 10, CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 21

13 Financial Statements (continued) Notes to the Financial Statements (continued) 8. CREDITORS (continued) Amounts payable to the Trustee, associates of the Trustee and agents of either of them: Trustee s fees Transaction charges Safe custody and other bank charges Interest payable ,395 1,014 Other expenses 9,480 8,280 Taxation payable: Corporation tax 5,461 7,974 Stamp duty reserve tax ,462 8,020 Total creditors 27, , RELATED PARTY TRANSACTIONS Management fees payable to Capita Financial Managers Limited ( the Manager ), registration fees payable to Capita Financial Administrators Limited (an associate of the Manager) are disclosed in note 4 and amounts due at the year end are disclosed in note 8. The aggregate monies received by the Manager through the issue of units and paid on cancellation of units are disclosed in the Statement of Change in Net Assets Attributable to Unitholders on page 15. The amounts outstanding at the year end in respect of these monies are shown in note 7. Capita Financial Managers Limited and its associates (including other authorised investment funds managed by Capita Financial Managers) had the following shareholdings in the Trust: Held at Change in Held at year Income units 608,799 (109,154) 717,953 Accumulation units 785,235 (183,219) 968,454 Trustee and other fees payable to BNY Mellon Trust & Depositary (UK) Limited are detailed in note 2 and note 4 respectively. The amounts prepaid and outstanding at the year end in respect of those fees are shown in notes 7 and 8. The net cash balances on deposit with The Bank of New York Mellon (an associate of BNY Mellon Trust & Depositary (UK) Limited) at the balance sheet date were 9,248 overdrawn ( : 25,450). Net interest paid was 186 ( : 323). 9. RELATED PARTY TRANSACTIONS (continued) A unitholder may be able to exercise significant influence over the financial and operating policies of the Trust and as such is deemed to be a related party. At the balance sheet date the following unitholder held in excess of 20% of the shares in issue of the Trust. Capita Financial Unit Trust Managers Limited 20.17% ( : 20.31%) All other amounts paid to, or received from, the related parties, together with the outstanding balances are disclosed in the financial statements. 10. CONTINGENT LIABILITIES AND COMMITMENTS There are no contingent liabilities or outstanding commitments ( : none). 11. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS In pursuing the investment objective a number of financial instruments are held which may comprise securities and other investments, cash balances and debtors and creditors that arise directly from operations. Derivatives, such as futures or forward currency contracts, may be utilised for hedging purposes. The main risks from the Trust s holding of financial instruments, together with the Manager s policy for managing these risks, are set out below: i. Credit risk Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. This includes counterparty and issuer risk. Cash is held with reputable credit institutions and credit risk is assessed on a regular basis. ii. Certain transactions in securities that the Trust enters into expose it to the risk that the counterparty will not deliver the investment for a purchase, or cash for a sale after the Trust has fulfilled its responsibilities. The Trust only buys and sells investments through brokers which have been approved by the Manager as an acceptable counterparty and these are reviewed on an ongoing basis. Interest rate risk Interest rate risk is the risk that the value of the Trust s investments will fluctuate as a result of interest rate changes. The value of fixed interest securities may be affected by changes in the interest rate environment, either globally or locally. Changes in the rate of return in one asset class may influence the valuation basis of other classes. The amount of revenue receivable from floating rate securities and on bank balances or payable on bank overdrafts will be affected by fluctuations in interest rates. Investment in collective investment schemes exposes the Trust to indirect interest rate risk to the extent that they invest in interest bearing securities, the returns from which will be affected by fluctuations in interest rates. 22 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 23

14 Financial Statements (continued) Notes to the Financial Statements (continued) 11. DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS (continued) ii. Interest rate risk (continued) The table below shows the interest rate risk profile: Floating rate assets: Pounds sterling 2,353,443 3,100,731 Floating rate liabilities: Pounds sterling (97,998) (63,531) Assets on which interest is not paid: Pounds sterling 4,403,051 4,943,506 Liabilities on which interest is not paid: Pounds sterling (61,890) (389,675) Net assets 6,596,606 7,591, DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS (continued) vi. Fair value of financial assets and financial liabilities There is no material difference between the value of the financial assets and liabilities, as shown in the balance sheet, and their fair value. vii. Derivatives The Trust held no derivatives during the current or prior year. 12. PORTFOLIO TRANSACTION COSTS Securities have been bought and sold at the dealt price with no further transactions costs added to purchases or deducted from sales. 13. POST BALANCE SHEET EVENTS On Thursday 12 April 2012 Liontrust Asset Management acquired Walker Crips Asset Management. As a result of this, the Investment Manager for the Trust changed to Liontrust Asset Management effective from 13 April iii. iv. The floating rate financial assets and liabilities comprise bank balances and bank overdraft positions which earn or pay interest at rates linked to the Bank of England base rate and collective investment schemes that pay UK interest distributions. Foreign currency risk The income and capital value of the Fund s investments are denominated in sterling and, therefore, the financial statements are not subject to the risk of currency movements. Liquidity risk The main liability of the Trust is the cancellation of any units that investors want to sell. Investments may have to be sold to fund such cancellations should insufficient cash be held at the bank to meet this obligation. To reduce liquidity risk the Investment Manager will ensure that a substantial portion of the Trust s assets consist of readily realisable securities. v. Market price risk Market price risk is the risk that the value of the Trust s financial instruments will fluctuate as a result of changes in market prices caused by factors other than interest rates or foreign currency movement. Market price risk arises primarily from uncertainty about the future prices of financial instruments that the Trust holds. Market price risk represents the potential loss the Trust may suffer through holding market positions in the face of price movements. The Trust s investment portfolio is exposed to price fluctuations, which are monitored by the Manager in pursuance of the investment objective and policy. For an equity portfolio the risk is generally regarded as consisting of two elements stock specific risk and market risk. Adhering to investment guidelines and avoiding excessive exposure to one particular issuer can limit stock specific risk. Subject to compliance with the investment objective, spreading exposure across a broad range of global stocks can mitigate market risk. 24 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 25

15 Financial Statements (continued) DISTRIBUTION TABLE FOR THE YEAR ENDED 31 JANUARY 2012 IN PENCE PER UNIT Interim Group 1 Units purchased prior to 1 February 2011 Group 2 Units purchased on or after 1 February 2011 and on or before 31 July 2011 Income Units Group 1 Group 2 Accumulation Units Group 1 Group 2 Net Revenue Net Revenue Equalisation Equalisation Paid Allocated Final Group 1 Units purchased prior to 1 August 2011 Group 2 Units purchased on or after 1 August 2011 and on or before 31 January 2012 Income Units Group 1 Group 2 Accumulation Units Group 1 Group 2 Net Revenue Net Revenue Equalisation Equalisation Payable Allocation Paid Allocated Paid Allocated GENERAL INFORMATION VALUATION POINT The valuation point of the Trust is 8.30am on each business day. Valuations may be made at other times with the Trustee s approval. BUYING AND SELLING OF UNITS The Manager will accept orders to buy or sell units on normal business days between 8.30am and 5.30pm. Instructions to buy or sell units may be either in writing to: 2 The Boulevard, City West One Office Park, Gelderd Road, Leeds LS12 6NT or by telephone on A contract note will be issued by close of business on the next business day after the dealing date to confirm the transaction. PRICES The most recent buying and selling prices of units are available on the website of the Investment Management Association at under the heading Capita Financial Managers or by calling during the Manager s normal business hours. OTHER INFORMATION The Trust Deed, Prospectus, Simplified Prospectus and the latest annual and interim reports may be inspected at the offices of the Manager and the Trustee and copies may be obtained on application to the Manager. The Register of Unitholders can be inspected by unitholders during normal business hours at the Customer Service Centre, Capita Financial Administrators Limited at 2 The Boulevard, City West One Office Park, Gelderd Road, Leeds LS12 6NT. Unitholders who have any complaints about the operation of the Trust should contact the Manager or the Trustee in the first instance. In the event that a unitholder finds the response unsatisfactory they may make their complaint direct to the Financial Ombudsman Service at South Quay Plaza, 183 Marsh Wall, London E14 9SR. DATA PROTECTION ACT Unitholders names will be added to a mailing list which may be used by the Manager, its associates or third parties to inform investors of other products by sending details of such products. Unitholders who do not want to receive such details should write to the Manager requesting their removal from any such mailing list. EQUALISATION Equalisation applies only to units purchased during the distribution period (Group 2 units). It represents the accrued revenue included in the purchase price of the units. After averaging it is returned with the distribution as a capital repayment. It is not liable to Income Tax but must be deducted from the cost of the units for Capital Gains Tax purposes. 26 CF Walker Crips Select Income Trust CF Walker Crips Select Income Trust 27

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17 Ibex House, Minories, London EC3N 1DX T F